A puzzling NATO standoff came to an end Tuesday as abruptly as it began.

At least it’s over for now. The NATO in this case has nothing to do with the current gunboat diplomacy by Western allies and Russian fighter jets over the Black Sea but a legal fight over a seemingly innocuous pipeline connection that’s embroiled oilsands producer MEG Energy and rail terminal operator Canexus.

Construction on a tie-in to a pipeline to Canexus’s North American Terminal Operations (NATO) rail terminal will resume as early as Wednesday after an Alberta court issued an interim ruling to allow completion of the work that was expected to wrap up in August. It was only a week earlier that Canexus revealed it was seeking the judicial ruling after MEG refused its work crews access to the pipeline in northern Alberta on Aug. 20. Neither company is saying much about the details of the dispute.

Canexus has said MEG had “no legal justifi cation” for blocking access.

The company issued a statement Tuesday to say work would resume after the “court decision to enforce specifically the terms and provisions of the pipeline agreement.”

The work is expected to take about two weeks to complete. Canexus had expected the 100,000 barrel-a-day rail loading terminal at Bruderheim – originally shut down for expansion work June 17 – to be back in service on Sept. 1. MEG has several related concerns it wanted addressed before work on the tie-in of its pipeline started but will continue its discussions with Canexus, said spokesman Brad Bellows, refusing to elaborate on the disagreement.

“Our preference was to work out all the issues before shovels hit the ground,” Bellows said, noting the issue may return to court if the companies can’t get a resolution.

Industry analysts have speculated the dispute could be over financial terms of a contract, access to the facility or a possible sale of the terminal.

Canexus gained 45 cents to $4.93 on the Toronto Stock Exchange Tuesday after it dropped 60 cents the day legal action was announced, one week ago. The chemical company turned rail terminal operator has traded between $3.97 and $7.72 in the last year.

MEG, with five times the market capitalization of Canexus, was little changed at $36.82.

Canexus has revealed the cost of the NATO project – Canada’s first pipeline-connected oil-rail terminal – had risen to as much as $360 million from an estimated $315 million in January and $125 million as recently as 2012.

The facility, on a 480-acre site about 50 kilometres northeast of Edmonton, began truck-to-rail operations in 2011. Deliveries by pipeline started in December 2013 as delays to big new North American pipelines created opportunities to move oil by rail. “2014 is a year that will position Canexus for the future … 2014 is not without its challenges though,” newly appointed chief executive Doug Wannacott said during a second-quarter conference call with analysts in early August.

A dispute with one of its major customers – the original feeder line to NATO was from MEG’s Stonefell storage terminal – wasn’t mentioned among the “challenges.”

Wannacott replaced Gary Kubera, who left as chief executive in March. The company produces sodium chlorate and chlor-alkali products for the pulp and paper and water treatment industries, and it recently expanded into the oil-by-rail business. Wannacott left no doubt of the need for change during the secondquarter call.

“Throughout my career, I’ve had the opportunity on more than one occasion to have turned businesses around and add great value and that is what we intend to do at Canexus,” said Wannacott, previously the chief operating officer of agri-products at Viterra.

Canexus expects to load seven unit trains a week at NATO once operations resume and increase to more than 10 a week in 2015. Each unit train carries as much as 80,000 barrels of oil and the NATO terminal is one of several newly built or under construction in Alberta.

Whether Canexus will even own the terminal at that point is an open question. Industry analysts have raised the potential sale of the chemical business or mid-stream assets to enhance shareholder value and in the second quarter call, Wannacott acknowledged that possibility.

“We will continue to advance discussions with those parties that have expressed potential interest in our assets,” he said. Regardless of how those talks play out, MEG expects to be a customer at the NATO terminal, even if its negotiations with Canexus happen before a judge. “This is just an issue that needs resolution,” Bellows said.

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